Rising NPAs of banks pose a major threat to the economy

Banks need િકે 13 billion to recapitalize: Experts claim

New delhi date. Monday, November 2, 2020

Three former Reserve Bank of India (RBI) governors have warned that rising NPAs of banks pose a major threat to the country's economic growth. If the government does not take immediate action in this direction, it could have a detrimental effect on the economy.

This is stated in the next book of a journalist of the former governors of RBI. The book states that the problem is that the government has spent heavily to fight the Kavid-19 epidemic and now has very little resources left to help the banks.

The fiscal deficit threatens to double the budget target due to declining revenue collection. D Subbarao, who was the RBI governor from 2008 to 2013, said the problem of bad loans was big and real. However it is also a fact that the government has its own financial constraints.

The government has allocated Rs 20,000 crore for recapitalization of state-owned banks this year. However, experts believe that ર 13 billion is needed to recapitalize banks.

In the last three years, state-owned banks have invested Rs 2.6 lakh crore in state-owned banks, but their problems have increased rather than decreased. By March, banks' NPAs are expected to rise to 12.5 per cent. Which is the highest ever.

Reddy, who was the RBI governor from 2003 to 2008, said the financial crisis had hit the banking sector first and then the financial sector, affecting the economy. NPA is one problem but the result of many other problems.

C Rangarajan, who was the RBI governor from 1992 to 1997, said the real estate sector remained a problem and policy decisions such as the ban on banknotes had exacerbated the problem in the banking sector. This is an economic crisis.